American Medical Systems (AMMD) 8-K American Medical Systems Reports $90.5 Million Dollars In Revenues, Up 47 Percent VS Prior Year

DATE: October 30, 2006

FOR IMMEDIATE RELEASE

AMERICAN MEDICAL SYSTEMS REPORTS $90.5 MILLION DOLLARS IN REVENUES, UP 47 PERCENT VS PRIOR YEAR

Base Business Revenues up 17 Percent, Laserscope Revenues Reported at $18.5 Million Dollars

MINNEAPOLIS, October 30, 2006 — American Medical Systems Holdings, Inc. (NASDAQ: AMMD) reported revenues of $90.5 million for the third quarter of 2006, a 47 percent increase over revenues of $61.7 million in the comparable quarter of 2005. This includes $18.5 million of revenue from the Laserscope business. The Laserscope contribution for 2006 includes revenue beginning July 21. Excluding Laserscope revenues, AMS revenue was $72.0 million, which represents 17 percent growth from the same quarter of 2005.

The Company reported a loss from continuing operations for the third quarter of 2006 of $57.9 million or $0.83 per share. Excluding costs and operating income associated with the Laserscope acquisition and stock-based compensation expense associated with the adoption of SFAS 123(R), non-GAAP AMS base business adjusted net income from continuing operations was $12.7 million, or $0.18 per share, an increase of 20 percent from the third quarter of 2005. On a comparable basis, non-GAAP net income in the third quarter of 2005 was $10.6 million, or $0.15 per share.

As previously announced, the Company expects to sell the aesthetics business during the current year, and has therefore reported it as a discontinued operation.

A reconciliation of the loss from continuing operations to non-GAAP AMS base business adjusted net income from continuing operations is presented below.

	Third Quarter			Third Quarter
	2006			2005
Net (loss) income from continuing operations		($57.9	)	$	1.4
Adjustments related to Laserscope acquisition:
In-process research and development charge		61.5			—
Amortization of intangible assets		3.5			—
Integration expenses		0.3			—
Financing charges and interest expense		8.2			—
Laserscope income from continuing operations		(3.1	)		—
		70.4			—
Tax impact of Laserscope acquisition adjustments		(1.2	)		—
Total adjustments related to Laserscope acquisition		69.2			—
Stock based compensation charges		1.4			—
In-process research and development charge from acquisition of Ovion Inc.		—			9.2
Non-GAAP AMS base business adjusted net income from continuing operations	$	12.7		$	10.6

American Medical Systems
October 30, 2006
Page 2 of 12

As the integration of Laserscope progresses, the Company will no longer report its base business separate from the newly acquired operations. However, the Company will continue to adjust for certain items such as in-process research and development charges and integration costs that affect comparability from period to period. On that basis, third quarter non-GAAP net income from continuing operations, excluding the charge for IPR&D and integration costs from Laserscope and stock-based compensation expense associated with the adoption of SFAS 123(R), was $5.2 million, or $0.07 per share. On a comparable basis, non-GAAP net income in the third quarter of 2005 was $10.6 million, or $0.15 per share. The decrease in earnings from continuing operations, as adjusted, is primarily due to finance and interest charges and amortization expense of $7.1 million after taxes, or $0.10 per share. A reconciliation of the loss from continuing operations to non-GAAP adjusted net income from continuing operations is presented below and in the attached financial tables.

	Third Quarter			Third Quarter
	2006			2005
Net (loss) income from continuing operations		($57.9	)	$	1.4
Adjustments related to Laserscope acquisition:
In-process research and development charge		61.5			—
Integration expenses		0.3			—
		61.8			—
Tax impact of Laserscope acquisition adjustments		(0.1	)		—
Total adjustments related to Laserscope acquisition		61.7			—
Stock based compensation charges		1.4			—
In-process research and development charge from acquisition of Ovion Inc.		—			9.2
Non-GAAP net income from continuing operations, as adjusted	$	5.2		$	10.6

Revenues for the first nine months of 2006 totaled $242.9 million, including $18.5 million revenue from the Laserscope business. The Laserscope contribution for 2006 includes revenue beginning July 21st. Excluding Laserscope revenue, AMS revenue for the first nine months of 2006 was $224.5 million, up 18 percent from the same period of 2005.

Net loss from continuing operations as reported for the nine month period ending September 30, 2006 was $54.6 million, or $0.78 per share. Excluding integration costs and bridge financing commitment fees associated with the Laserscope acquisition, in-process research and development costs from the acquisitions completed in 2005 and 2006, and stock-based compensation expense associated with the adoption of SFAS 123(R), non-GAAP net income from continuing operations was $34.9 million, or $0.48 per share. On a comparable basis, non-GAAP net income for the nine month period of 2005 was $33.9 million, or $0.47 per share. The decrease in earnings from continuing operations, as adjusted, is primarily due to finance and interest charges and amortization expense of $7.3 million or $0.10 per share. A reconciliation of the loss from continuing operations to non-GAAP adjusted net income from continuing operations is presented below and in the attached financial tables.

American Medical Systems
October 30, 2006
Page 3 of 12

	Nine Months			Nine Months
	Ended			Ended
	September 30, 2006			October 1, 2005
Net (loss) income from continuing operations		($54.6	)	$	24.7
Adjustments related to Laserscope acquisition:
In-process research and development charge		61.5			—
Integration expenses		0.3			—
Commitment fee on bridge financing		7.0			—
		68.8			—
Tax impact of Laserscope acquisition adjustments		(2.8	)		—
Total adjustments related to Laserscope acquisition		66.0			—
Stock based compensation charges		5.3			—
In-process research and development charge from acquisition of BioControl Medical, Ltd. and Solarant Medical, Inc.		18.2			—
In-process research and development charge from acquisition of Ovion Inc.		—			9.2
Non-GAAP net income from continuing operations, as adjusted	$	34.9		$	33.9

Martin J. Emerson, President and Chief Executive Officer, commented, “We are very pleased with the progress of the Laserscope integration activities during the third quarter, as well as the momentum of the key product lines that will be the growth drivers for AMS in the future. Although the third quarter Laserscope revenue contribution was somewhat lower than expected, our experience during the third quarter integration process has only strengthened our confidence in the opportunity for this acquisition to enhance AMS’ long term revenue and earnings growth.”

Emerson continued, “The upcoming quarters will represent some of the most exciting periods in AMS’ history as we complete the Laserscope integration and expand the global market reach of those product lines. Laserscope is our opportunity to become the global leader in providing the gold standard for treatment of obstructive BPH. AMS also is ready to further its leadership position across the field of pelvic health. Significantly, we have already begun enrollment in our Ovion clinical trial and, as well, we are launching two exciting products this quarter; the700 MSpenile prosthesis andAdVance, a product for treating mild male incontinence. It is these types of meaningful marketplace changes with which AMS has been, and will continue to be, identified.”

Outlook

For the year 2006, the Company has updated its expected revenue range to $351 to $357 million including a Laserscope revenue contribution of between approximately $43 and $47 million. Total company revenues are projected for the fourth quarter of 2006 to be in the range from $108 to $114 million, including a base business range of $84 million to $86 million and a Laserscope revenue contribution of between $24 and $28 million. The Laserscope revenue contribution for the second half of 2006 excludes third quarter revenues of approximately $4.3 million that were recorded in July through the July 20th acquisition closing date.

American Medical Systems
October 30, 2006
Page 4 of 12

The Company expects fourth quarter non-GAAP earnings from continuing operations per share (based on projected GAAP earnings from continuing operations per share, excluding the impact of in-process research and development charges and stock-based compensation expenses) to be in the range of $0.12 to $0.15. Based on the same non-GAAP metric, the Company is projecting its earnings from continuing operations per share for the year 2006 to be in a range of $0.60 to $0.63 per share.

AMS Guidance Including Laserscope

	Actual Results		Projected
	Through		Results		Projected
	Third Quarter		Fourth Quarter		2006
	2006		2006		Results
Projected earnings per share including stock-based compensation charges and excluding charges for IPR&D, integration costs, interest on bridge financing commitments and discontinued operations	$	0.41	$	0.09 - $0.12	$	0.50 - $0.53
Plus: stock-based compensation charges		0.07	$	0.03	$	0.10
Equals: non-GAAP earnings as presented for prior year comparability on attached schedule	$	0.48	$	0.12 - $0.15	$	0.60 - $0.63

As the Company looks forward to 2007, total Company revenues are anticipated in the range of $505 to $530 million. Excluding the impact of IPR&D charges, non-GAAP earnings from continuing operations per share are preliminarily estimated for the combined Company at $0.76 to $0.81. Non-GAAP cash earnings from continuing operations for 2007 are estimated in the range of $1.10 to $1.16 per share. Non-GAAP cash earnings from continuing operations per share are defined as GAAP earnings from continuing operations plus tax-effected depreciation, amortization, stock-based compensation expenses and IPR&D charges.

Over the next five years, the Company targets revenue growth in the range of 20 to 24 percent with operating margins targeted to grow to 30 percent of sales by 2010. To achieve this, the combined Company’s gross margins, inclusive of the lower margin capital equipment sales of Laserscope, are targeted to increase to levels above 80 percent in the same period.

Earnings Call Information

American Medical Systems will host a conference call today at 5:00 p.m. eastern time to discuss its third quarter 2006 results, projected 2006 financial results, the status of the Laserscope integration and preliminary guidance for 2007. Those without internet access may join the call from within the U.S. by dialing 800-886-7217; outside the U.S., dial 706-679-3821. A live webcast of the call will be available through the Company’s corporate website at www.AmericanMedicalSystems.com and available for replay three hours after the completion of the call.

American Medical Systems
October 30, 2006
Page 5 of 12

About American Medical Systems

American Medical Systems, headquartered in Minnetonka, Minnesota and including its recently concluded acquisition of Laserscope, is a diversified supplier of medical devices and procedures to cure erectile dysfunction, benign prostatic hyperplasia, incontinence, menorrhagia, prolapse and other pelvic disorders in men and women. These disorders can significantly diminish one’s quality of life and profoundly affect social relationships. In recent years, the number of people seeking treatment has increased markedly as a result of longer lives, higher quality-of-life expectations and greater awareness of new treatment alternatives. American Medical Systems’ products reduce or eliminate the incapacitating effects of these diseases, often through minimally invasive therapies. The Company’s products were used to provide approximately 170,000 patient cures in 56 countries during 2005.

Forward-Looking Statements

This press release contains forward-looking statements relating to the market opportunities, future products, sales and financial results of American Medical Systems and Laserscope and the combined business. These statements and other statements contained in this press release that are not purely historical fact are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on management’s beliefs, certain assumptions and current expectations. These forward-looking statements are subject to risks and uncertainties such as the timing and success of new product introduction including, but not limited to, theGreenLight HPS ^TM system; successful integration of Laserscope into AMS’ business; physician acceptance, endorsement, and use of AMS and Laserscope products; assumptions made regarding the investments required to integrate and grow the Laserscope business; valuations to be performed of the tangible and intangible assets of Laserscope; estimates regarding the financial performance of Laserscope’s aesthetics business; the negotiated proceeds from our intended sale of the Laserscope aesthetics business; factors impacting the stock market and our share price and, thereby, the share dilution of our convertible securities; regulatory matters; competitor activities; changes in and adoption of reimbursement rates; potential product recalls and other risks and uncertainties described in AMS’ and Laserscope’s Annual Reports on Form 10-K for the year ended December 31, 2005 and our other SEC filings. Actual results may differ materially from anticipated results. The forward-looking statements contained in this press release are made as of the date hereof, and AMS undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

More information about the Company and its products can be found at its website www.AmericanMedicalSystems.com and in the Company’s Annual Report on Form 10-K for 2005 and its other SEC filings.

Contact:	Jill Burchill Interim Chief Financial Officer 952-930-6118 Jill.Burchill@AmericanMedicalSystems.com
	Marty Emerson President and Chief Executive Officer 952-930-6334 Marty.Emerson@AmericanMedicalSystems.com

American Medical Systems
October 30, 2006
Page 6 of 12

American Medical Systems Holdings, Inc.
Statements of Operations
(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30, 2006			October 1, 2005			September 30, 2006			October 1, 2005
Net sales	$	90,500		$	61,738		$	242,906		$	189,520
Cost of sales		18,865			11,156			42,302			34,130
Gross profit		71,635			50,582			200,604			155,390
Operating expenses
Marketing and selling		31,465			22,341			88,649			67,491
Research and development		9,295			4,995			22,849			14,499
In-process research and development		61,500			9,220			89,575			9,220
General and administrative		8,552			5,217			22,681			16,213
Integration costs		273			—			273			—
Amortization of intangibles		5,172			2,200			8,798			5,938
Total operating expenses		116,257			43,973			232,825			113,361
Operating (loss) income		(44,622	)		6,609			(32,221	)		42,029
Other (expense) income
Royalty income		479			505			1,340			1,491
Interest income		1,364			298			2,120			933
Interest expense		(8,907	)		(44	)		(9,260	)		(140	)
Financing charges		(491	)		—			(7,446	)		—
Other income (expense)		107			(28	)		397			(1,104	)
Total other (expense) income		(7,448	)		731			(12,849	)		1,180
(Loss) earnings from continuing operations before income taxes		(52,070	)		7,340			(45,070	)		43,209
Provision for income taxes		5,862			5,925			9,485			18,544
(Loss) income from continuing operations		(57,932	)		1,415			(54,555	)		24,665
Loss from discontinued operations, net of tax		(672	)		—			(672	)		—
Net (loss) income		($58,604	)	$	1,415			($55,227	)	$	24,665
Net (loss) income per share
Basic (loss) earnings from continuing operations		($0.83	)	$	0.02			($0.78	)	$	0.36
Discontinued operations, net of tax		(0.01	)		—			(0.01	)		—
Basic net (loss) earnings		($0.84	)	$	0.02			($0.79	)	$	0.36
Diluted (loss) earnings from continuing operations		($0.83	)	$	0.02			($0.78	)	$	0.34
Discontinued operations, net of tax		(0.01	)		—			(0.01	)		—
Basic net (loss) earnings		($0.84	)	$	0.02			($0.79	)	$	0.34
Weighted average common shares used in calculation
Basic		70,122			69,344			69,877			68,741
Diluted		70,122			72,096			69,877			71,658

American Medical Systems
October 30, 2006
Page 7 of 12

American Medical Systems Holdings, Inc.
Condensed Balance Sheets
(In thousands)

	September 30, 2006		December 31, 2005
	(unaudited)
Assets
Current assets
Cash and short term investments	$	34,545	$	46,390
Accounts receivable, net		77,575		51,058
Inventories, net		39,615		18,191
Assets of discontinued operations held for sale		34,400		—
Deferred income taxes and other current assets		33,923		7,269
Total current assets		220,058		122,908
Property, plant and equipment, net		39,982		21,371
Goodwill and intangibles, net		842,408		210,278
Deferred income taxes and other assets		3,927		4,769
Total assets	$	1,106,375	$	359,326
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	17,016	$	3,688
Liabilities of discontinued operations held for sale		6,100		—
Other accrued liabilities		70,009		49,687
Total current liabilities		93,125		53,375
Other long term liabilities		743,032		3,072
Total liabilities		836,157		56,447
Stockholders’ equity		270,218		302,879
Total liabilities and stockholders’ equity	$	1,106,375	$	359,326

American Medical Systems
October 30, 2006
Page 8 of 12

American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(In thousands)

	Nine Months Ended
	September 30, 2006			October 1, 2005
Cash flows from continuing operating activities
Net (loss) income		($55,227	)	$	24,665
Loss from discontinued operations		(672	)		—
(Loss) earnings from continuing operations		(54,555	)		24,665
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation		4,031			4,030
Loss on asset disposals		331			232
Amortization of intangibles, including deferred financing costs		9,289			5,938
In-process research and development charges		89,575			9,220
Financing charges on credit facility		6,955			—
Excess tax benefit from exercise of stock options		(1,515	)		—
Tax benefit on exercised stock option arrangements		5,614			4,079
Change in net deferred income taxes		4,701			912
Stock-based compensation		6,980			61
Changes in operating assets and liabilities		(6,732	)		(3,220	)
Net cash provided by continuing operating activities		64,674			45,917
Cash flows from investing activities of continuing operations
Purchase of property, plant and equipment		(13,484	)		(3,703	)
Purchase of business, net of cash acquired		(750,853	)		(56,309	)
Purchase of investments in technology		(28,075	)		(1,620	)
Purchase of license agreements		(1,020	)		—
Purchase of short term investments		(139	)		(30,340	)
Sale of short term investments		15,189			30,204
Net cash used in investing activities of continuing operations		(778,382	)		(61,768	)
Cash flows from financing activities of continuing operations
Proceeds from issuance of long term debt		361,218			—
Proceeds from senior secured credit facility		352,754			—
Proceeds from issuance of common stock and exercised stock options		8,321			11,926
Excess tax benefit from exercise of stock options		1,515			—
Proceeds from short term borrowings		4,000
Repayment of short term borrowings		(4,000	)
Financing charges on credit facility		(6,955	)		—
Net cash provided by financing activities of continuing operations		716,853			11,926
Cash used in discontinued operations
Operating activities		(672	)		—
Cash used in discontinued operations		(672	)		—
Effect of exchange rates		719			855
Net increase in cash and cash equivalents		3,192			(3,070	)
Cash and cash equivalents at beginning of period		30,885			35,689
Cash and cash equivalents at end of period	$	34,077		$	32,619
Supplemental disclosure
Cash paid for interest	$	935		$	0
Cash paid for taxes	$	16,798		$	14,843

American Medical Systems
October 30, 2006
Page 9 of 12

American Medical Systems Holdings, Inc.
Selected Sales Information
(In thousands)

	Three Months Ended						Nine Months Ended
	September 30, 2006			October 1, 2005			September 30, 2006			October 1, 2005
Sales
Product line
Men’s health		60,446			37,724			151,016			119,130
Women’s health		30,054			24,014			91,890			70,390
Total	$	90,500		$	61,738		$	242,906		$	189,520
Geography
United States	$	70,466		$	49,640		$	187,489		$	148,710
International		20,034			12,098			55,417			40,810
Total	$	90,500		$	61,738		$	242,906		$	189,520
Percent of total sales
Product line
Men’s health		67	%		61	%		62	%		63	%
Women’s health		33	%		39	%		38	%		37	%
Total		100	%		100	%		100	%		100	%
Geography
United States		78	%		80	%		77	%		78	%
International		22	%		20	%		23	%		22	%
Total		100	%		100	%		100	%		100	%

American Medical Systems
October 30, 2006
Page 10 of 12

American Medical Systems Holdings, Inc.
Adjustments to the Statement of Operations for Consistent Presentation
(In thousands, except per share data)

	As Reported						As Adjusted						As Adjusted			As Adjusted
	Three Months Ended			Laserscope(A)			Three Months Ended			SFAS 123 (R )(B)			Three Months Ended(C)			Three Months Ended(D)
	September 30, 2006			Impact			September 30, 2006			Stock Option			September 30, 2006			October 1, 2005
Net sales	$	90,500		$	0		$	90,500		$	0		$	90,500		$	61,738
Cost of sales		18,865			—			18,865			96			18,769			11,156
Gross profit		71,635			—			71,635			(96	)		71,731			50,582
Operating expenses Marketing and selling		31,465			—			31,465			703			30,762			22,341
Research and development		9,295			—			9,295			471			8,824			4,995
In-process research and development		61,500			61,500			—			—			—			—
General and administrative		8,552			—			8,552			634			7,918			5,217
Integration costs		273			273			—			—			—			—
Amortization of intangibles		5,172			—			5,172			—			5,172			2,200
Total operating expenses		116,257			61,773			54,484			1,808			52,676			34,753
(Loss) earnings from continuing operations before income taxes		(44,622	)		(61,773	)		17,151			(1,904	)		19,055			15,829
Other (expense) income Royalty income		479			—			479			—			479			505
Interest income		1,364			—			1,364			—			1,364			298
Interest expense		(8,907	)		—			(8,907	)		—			(8,907	)		(44	)
Financing charges		(491	)		—			(491	)		—			(491	)		—
Other (expense) income		107			—			107			—			107			(28	)
Total other (expense) income		(7,448	)		—			(7,448	)		—			(7,448	)		731
(Loss) earnings from continuing operations before income taxes		(52,070	)		(61,773	)		9,703			(1,904	)		11,607			16,560
Provision for income taxes		5,862			(104	)		5,966			(463	)		6,428			5,925
(Loss) income from continuing operations		(57,932	)		(61,669	)		3,737			(1,441	)		5,179			10,635
Loss from discontinued operations, net of tax		(672	)		(672	)		—			—			—			—
Net (loss) income		($58,604	)		($62,341	)	$	3,737			($1,441	)	$	5,179		$	10,635
Net (loss) income per share
Basic (loss) earnings from continuing operations		($0.83	)				$	0.05					$	0.07		$	0.15
Discontinued operations, net of tax		(0.01	)					—						—			—
Basic net (loss) earnings		($0.84	)				$	0.05					$	0.07		$	0.15
Diluted (loss) earnings from continuing operations		($0.83	)				$	0.05					$	0.07		$	0.15
Discontinued operations, net of tax		(0.01	)					—						—			—
Basic net (loss) earnings		($0.84	)				$	0.05					$	0.07		$	0.15
Weighted average common shares used in calculation
Basic		70,122						70,122						70,122			69,344
Diluted		70,122						72,035					72,035(C)				72,096

Note
(A)	These charges are for IPR&D, bridge financing commitment costs and integration related to the Laserscope acquisition.
(B)	This expense represents SFAS 123(R) stock option expense. SFAS 123(R) was implemented in Q1 2006.
(C)	Our GAAP reported diluted shares exclude the impact of outstanding options since their inclusion would be anti-dilutive given our GAAP net loss position. The 1.9 million increase to diluted shares is to recognize our non-GAAP net income position.
(D)	Q3 2005 results adjusted for IPR&D charge. Details on attached page.

American Medical Systems
October 30, 2006
Page 11 of 12

American Medical Systems Holdings, Inc.
Adjustments to the Statement of Operations for Consistent Presentation
(In thousands, except per share data)

	As Reported						In-Process			As Adjusted						As Adjusted			As Adjusted
	Nine Months Ended			Laserscope(A)			Research and(B)			Nine Months Ended(C)			SFAS 123 (R )(D)			Nine Months Ended			Nine Months Ended(E)
	September 30, 2006			Impact			Development			September 30, 2006			Stock Option			September 30, 2006			October 1, 2005
Net sales	$	242,906		$	0		$	0		$	242,906		$	0		$	242,906		$	189,520
Cost of sales		42,302			—			—			42,302			251			42,051			34,130
Gross profit		200,604			—			—			200,604			(251	)		200,855			155,390
Operating expenses
Marketing and selling		88,649			—			—			88,649			2,454			86,195			67,491
Research and development		22,849			—			—			22,849			1,505			21,344			14,499
In-process research and development		89,575			61,500			28,075			—			—			—			—
General and administrative		22,681			—			—			22,681			2,771			19,910			16,213
Integration costs		273			273			—			—			—			—			—
Amortization of intangibles		8,798			—			—			8,798			—			8,798			5,938
Total operating expenses		232,825			61,773			28,075			142,977			6,730			136,247			104,141
(Loss) earnings from continuing operations before income taxes		(32,221	)		(61,773	)		(28,075	)		57,627			(6,981	)		64,608			51,249
Other (expense) income
Royalty income		1,340			—			—			1,340			—			1,340			1,491
Interest income		2,120			—			—			2,120			—			2,120			933
Interest expense		(9,260	)		—			—			(9,260	)		—			(9,260	)		(140	)
Financing charges		(7,446	)		(6,955	)		—			(491	)		—			(491	)		—
Other (expense) income		397			—			—			397			—			397			(1,104	)
Total other (expense) income		(12,849	)		(6,955	)		—			(5,894	)		—			(5,894	)		1,180
(Loss) earnings from continuing operations before income taxes		(45,070	)		(68,728	)		(28,075	)		51,733			(6,981	)		58,714			52,429
Provision for income taxes		9,485			(2,742	)		(9,896	)		22,123			(1,696	)		23,819			18,544
(Loss) income from continuing operations		(54,555	)		(65,986	)		(18,179	)		29,610			(5,285	)		34,895			33,885
Loss from discontinued operations, net of tax		(672	)		(672	)		—			—			—			—			—
Net (loss) income		($55,227	)		($66,658	)		($18,179	)	$	29,610			($5,285	)	$	34,895		$	33,885
Net (loss) income per share
Basic (loss) earnings from continuing operations		($0.78	)							$	0.42					$	0.50		$	0.49
Discontinued operations, net of tax		(0.01	)								—						—			—
Basic net (loss) earnings		($0.79	)							$	0.42					$	0.50		$	0.49
Diluted (loss) earnings from continuing operations		($0.78	)							$	0.41					$	0.48		$	0.47
Discontinued operations, net of tax		(0.01	)								—						—			—
Basic net (loss) earnings		($0.79	)							$	0.41					$	0.48		$	0.47
Weighted average common shares used in calculation
Basic		69,877									69,877						69,877			68,741
Diluted		69,877									72,001						72,001			71,658

Note;
(A)	These charges are for IPR&D, bridge financing commitment costs and integration related to the Laserscope acquisition.
(B)	These charges are for $25.6 million and $2.5 million of IPR&D recorded as part of the BioControl and Solarant acquisitions, respectively.
(C)	Our GAAP reported diluted shares exclude the impact of outstanding options since their inclusion would be anti-dilutive given our GAAP net loss position. The 2.1 million increase to diluted shares is to recognize our non-GAAP net income position.
(D)	This expense represents SFAS 123(R) stock option expense. SFAS 123(R) was implemented in Q1 2006.
(E)	Q3 2005 YTD results adjusted for IPR&D charge. Details on attached page.

American Medical Systems
October 30, 2006
Page 12 of 12

American Medical Systems Holdings, Inc.
Adjustments to the Statement of Operations for Consistent Presentation
(In thousands, except per share data)

	Three Months Ended October 1, 2005										Nine Months Ended October 1, 2005
					In-Process									In-Process
					Research and(A)									Research and(A)
	As Reported				Development			As Adjusted			As Reported			Development			As Adjusted
Net sales	$	61,738				—		$	61,738		$	189,520			—		$	189,520
Cost of sales		11,156				—			11,156			34,130			—			34,130
Gross profit		50,582				—			50,582			155,390			—			155,390
Operating expenses
Marketing and selling		22,341				—			22,341			67,491			—			67,491
Research and development		4,995				—			4,995			14,499			—			14,499
In-process research and		9,220				9,220			—			9,220			9,220			—
development General and administrative		5,217				—			5,217			16,213			—			16,213
Integration costs		0				—			—			—			—			—
Amortization of intangibles		2,200				—			2,200			5,938			—			5,938
Total operating expenses		43,973				9,220			34,753			113,361			9,220			104,141
Operating income (loss)		6,609				(9,220	)		15,829			42,029			(9,220	)		51,249
Other income (expense)
Royalty income		505				—			505			1,491			—			1,491
Interest income		298				—			298			933			—			933
Interest expense		(44	)			—			(44	)		(140	)		—			(140	)
Financing charges		0				—			—			—			—			—
Other (expense) income		(28	)			—			(28	)		(1,104	)		—			(1,104	)
Total other income (expense)		731				—			731			1,180			—			1,180
Income (loss) before income taxes		7,340				(9,220	)		16,560			43,209			(9,220	)		52,429
Provision for income taxes		5,925		��		—			5,925			18,544			—			18,544
Net income (loss)	$	1,415				($9,220	)	$	10,635		$	24,665			($9,220	)	$	33,885
Net income per share
Basic	$	0.02						$	0.15		$	0.36					$	0.49
Diluted	$	0.02						$	0.15		$	0.34					$	0.47
Weighted average common shares used in calculation
Basic		69,344							69,344			68,741						68,741
Diluted		72,096							72,096			71,658						71,658

Note
(B)	These charges are for the IPR&D recorded as part of the Ovion acquisition.